The Financial Services Authority (FSA) has fined Santander £1.5m for failing to confirm to customers the circumstances under which its structured products would be covered by the Financial Services Compensation Scheme (FSCS).
Customers began to query the extent of FSCS cover towards the end of 2008, but it was only in January 2010 that Santander clarified the position.
During this period, the bank sold approximately £2.7bn of structured products, including £1.2bn after June 2009, when it had concluded the circumstances in which its two products, Guaranteed Capital Plus and the Guaranteed Growth Plan, would be covered by the FSCS were limited.
However, new customers were not informed of the limitation in FSCS cover until January 2010.
The FSA said Santander has acknowledged it could have changed its product literature and training materials more quickly to reflect the FSCS position accurately, although the fact it allowed sales to continue with unclear Key Facts literature contributed to the seriousness of the breaches.
Tracey McDermott, acting director of enforcement and financial crime, said: "When firms provide customers with literature about products, the information has to be correct and unambiguous. After all it is there to help people make informed decisions about whether to invest.
"The extent of FSCS cover is important to customers, and firms must be clear about this in their Key Facts documents.
"Considering that sales of these products took place between 2008 and 2009, a time of financial uncertainty, Santander should have moved more quickly to confirm under which circumstances FSCS cover would be available."
The FSA confirmed it had no evidence the products were mis-sold and said no customers have suffered any financial loss as a result of Santander's failings.
Santander has conducted a customer contact exercise relating to all its structured product sales between 1 October 2008 and 6 January 2010, the period during which the breaches occurred.
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